South Korea urges unified crypto rules, expands sandbox

South Korea calls for unified crypto rules, stricter FATF Travel Rule compliance, and expands its regulatory sandbox to foster innovation and strengthen oversight.

South Korea’s Financial Intelligence Unit is urging global harmonization of virtual asset regulations, warning that fragmented national rules enable regulatory arbitrage and weaken efforts to combat financial crime. At a Financial Action Task Force (FATF) session in Paris, South Korea advocated for removing minimum transaction thresholds from the crypto Travel Rule and called for identity checks on all transfers, citing insufficient global compliance with anti-money-laundering standards. Domestically, South Korea plans to lower its threshold for the Travel Rule to zero in August. The Financial Services Commission also announced an expansion of its regulatory sandbox to include the Virtual Asset User Protection Act. This move aims to allow more blockchain and fintech services to seek regulatory exemptions, supporting innovation while maintaining robust oversight as the financial sector adapts to evolving market demands.